No long-term policy
THERE is considerable justification for blaming the petroleum ministry and the Oil & Gas Regulatory Authority for the mess in the CNG sector. If Ogra failed to regulate the sector and protect consumers, the ministry did not attempt to back its recent actions, intended to discourage the fuel’s use, with the cover of the law. This invited the Supreme Court to intervene to undo the “unlawful” acts of the ministry. Now both the ministry and the regulator are dillydallying over setting a ‘fair price’ in consultation with the pump owners as directed by the court. The dispute between the owners and Ogra worsened on Monday when pumps in many parts of the country, including Karachi, Islamabad and Peshawar, stopped filling car tanks. The owners argue that business had become unviable at existing prices. Even the warning from Ogra failed to deter them. As both pump owners and the regulator stick to their positions, hopes of an agreement on the fuel’s new price before Dec 5 as ordered by the court in the pricing case over a month ago, have dimmed.
While ordering the government to de-link CNG prices from petrol and revert to the half-yearly price revision mechanism, the court had also annulled illegal operating costs charged by the owners. Consequently, CNG prices came down by a whopping 31 per cent. Ever since, the pump owners and the government have not been able to work out a new price. In fact, the current stalemate suits the government as it hopes that the losses would force owners to wind up their businesses, thus making gas retrieved from the transport sector available for other crucial areas like industry.
While it is hard to disagree with the objective of reducing CNG use in view of growing gas shortages, all criticism of the government is valid for not devising a long-term policy for the use of this resource. This attitude is now resulting in heavy losses for those who had invested in CNG pumps and kits on the one hand, and fast-depleting reserves on the other. For the moment, perhaps, the government could cut its taxes and levies on CNG and fix a reasonable profit margin for the pump owners to provide relief to consumers as directed by the court. But more importantly, it should work out a time frame for phasing CNG pumps out for both owners and users. So far the government has shown no sign of doing so. Therefore, it is likely that its indecision may lead the court to determine the fuel’s price, which could have negative consequences.